KBRA Affirms Ratings for Park National Corporation

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Newark, Ohio-based Park National Corporation (NYSE: PRK) ("Park National" or "the company"). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for the bank subsidiary, The Park National Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings and Outlook are supported by PRK’s consistently strong financial performance across interest rate and credit cycles, including an ROA tracking near or above 1.3% over the last five years. More recently, the ROA has moved toward 2.0% over the past year due to continued NIM expansion, which remains at a robust level (4.8% during 2Q26), given its low-cost deposit base and benefits from the recent merger with First Citizens Bancshares, Inc. (FIZN), which closed in 1Q26. Noninterest income also plays a key role in PRK’s stable earnings profile with approximately 20%-25% of total revenue generated by stable, non-spread revenue sources with PRK’s trust and wealth management components becoming a more significant component. The company’s funding profile is a key credit strength, bolstered by a high-quality, branch-based deposit franchise spanning five states, including a top ten deposit market share in Ohio. The company is predominantly core deposit-funded (94% at 1Q26) and possesses a high percentage of noninterest bearing accounts (~30% of total deposits). This mix of factors results in a low-cost funding base including a cost of deposits of 1.21% at 2Q26. Credit quality remains sound and supportive of the company's ratings. While the NPA ratio is above peer medians, this is mainly a function of PRK's conservative risk rating philosophy and proactive portfolio management to work with borrowers to resolve credit issues. Additionally, net charge-offs remain consistently below peers and the allowance is adequate at 1.14% with a NPL coverage ratio of 131% as of 2Q26. Capital management has been relatively conservative and remained at solid levels within historical levels post FIZN acquisition and remain supportive of the ratings. At 1Q26, the company reported TCE and CET1 ratios of 11% and 13.5%, respectively. The company's robust earnings profile is anticipated to drive continued capital accretion and provide adequate loss absorbing capacity should credit quality unexpectedly deteriorate.

Rating Sensitivities

Greater geographic diversity as well as a successful track record operating as a bank over $10 billion in assets while maintaining strong earnings and consistently conservative credit quality could result in positive rating momentum over time. Although a rating downgrade is unlikely in the near term, a failure to properly integrate acquisitions, as well as a material deterioration in earnings or credit quality resulting in a considerable reduction in capital ratios to below peer levels could pressure ratings.

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